State of Play is a column that focuses on the trending stories in the casino and gambling space with sharp and clever insight from senior staff writer Steve Friess. Over his 25-year career, Friess has contributed to publications such as Newsweek, Time, New York Times and more.
These past few weeks in Congressional politics have been among the wildest and weirdest ever. It remains, as I write, anyone’s guess who will be the next Speaker of the House and third in line to the world’s most powerful elected position.
In other words, it might be the perfect question for anyone who likes to put money on politics.
Yet PredictIt, the popular and legal site where Americans can invest in political outcomes by trading “shares” in “markets,” is not taking money on this.
Boy, is it missing out.
The U.S. House of Representatives has been at a standstill for weeks, since Republicans booted then-Speaker Kevin McCarthy because a few rabblerousers didn’t like his decision to temporarily avert a government shutdown by cutting a deal with Democrats. Republicans hold a four-vote majority and any speaker must get 217 votes — a majority of the chamber’s votes — to take the crown.
At various points over these unprecedented weeks, there have been favorites who have faltered. First, it seemed McCarthy might not be deposed. Then it looked like the Republican Majority Leader, Rep. Steve Scalise, was the most likely winner. After he failed to hit 217 and dropped out, there was rumblings that McCarthy might come back into the fold.
Then, this week it was far-right Rep. Jim Jordan’s turn to appear ascendant only to flame out because enough moderates thought it a bad idea to be led by a 2020 election denier who ignores lawful subpoenas and has never passed a meaningful piece of legislation.
It would have been an incredible opportunity for PredictIt
This is madness! And an incredible opportunity for a site like PredictIt, which is run by Victoria University of Wellington in New Zealand with permission from the U.S. Commodity Futures Trading Commission (CFTC), to host the trading of millions of dollars at a time of year when there’s little else cresting in electoral politics.
It’s not like PredictIt is happy about this. More than 19 million shares were traded on the House speaker question leading up to McCarthy’s ultimate ascension this past January, so there is a precedent.
But for now, PredictIt believes it needs to step carefully as it navigates a federal effort to shut it down altogether. Spokeswoman Laura Singer tells me:
“Obviously, we know that it would be very popular. I promise you, it’s more frustrating for us than it is for you.”
PredictIt is not ‘gambling’ in the sportsbook sense
It must be noted that PredictIt does not offer “gambling” in the sportsbook sense of the word because it is not legal in the U.S. to wager on politics against the house on odds set by bookies.
Since 2014, though, it has been lawful to bet against other people in PredictIt’s commodities market the same way people invest money on where the price of agricultural products will be six months from now. Right now, you can “invest” as much as $850 on the outcome of a wide range of political questions, from who will win the 2024 GOP nomination to whether progressive star Rep. Alexandria Ocasio-Cortez will challenge President Joe Biden.
All was fine until a new, Democrat-dominated configuration of the CFTC decided this was icky. Last August, with little warning, the agency announced it was withdrawing its permission for PredictIt to operate. They never really provided any reason or specification for what PredictIt did that violated their operating agreement, and in January a federal court ruled that PredictIt could continue to operate.
The CFTC withdrew its first letter and filed another, supposedly more legitimate one, in March with a similar intent of taking down PredictIt. In July, the courts smacked that one down, too, on grounds the government still hadn’t sufficiently explained its rationale or given PredictIt a chance to prove it had complied or try to fix whatever the problems were.
Court wins aside, PredictIt remains cautious
Despite these court victories, PredictIt is understandably nervous. Sooner or later, the Keystone Kops at the CFTC might formulate some rationale that withstands judicial scrutiny and kills a beloved pastime for many.
And so they’re stepping cautiously as they decide what markets to allow. In some ways, the protracted Speaker question may be too wild. It could go on indefinitely. There’s even the possibility that Democrats strike a deal to give the temporary House leader, Speaker Pro Tempore Patrick McHenry, tools to legislate that stop short of making him the actual speaker. And maybe that becomes the status quo until Democrats win back the House in November 2024? Who knows?
Of course, all of that could be deftly managed in the rules governing what constitutes an outcome.
But still, the whole episode has PredictIt playing it super-safe. Singer says:
“In the interest of goodwill with the CFTC and a hopeful settlement in the future, we’re not putting up every new market that we possibly could think of. We’re on a little bit of a tighter leash. We really want the CFTC to come to some agreement, which will probably take less time than going through the legal process.”
PredictIt sticking to straight-forward questions
PredictIt is casting about like an abused person who’s trying to figure out why they keep being attacked and stepping gingerly so as to not raise hackles. Singer says they’re still putting up new markets, but they’re all more straight-forward questions like who wins the Kentucky governor’s race, that will be resolved by a public election rather than by the machinations of D.C. deal- and rule-making.
“Even though we believe that this would be a market that we definitely would put up, if they don’t agree with that then it would just makes this process harder.”
That all makes sense. It’s not PredictIt who’s at fault here.
But the CFTC’s job is to set out clear rules and regulations for the public’s benefit. Instead, the agency has muddied the water so much that Americans who want to put money on the hottest question of the year are forced to do so illegally with offshore bookmakers.
So much for protecting American consumers.
Read more from the State of Play column:
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- Casino Industry Must Heed Warnings Of Other Labor Strikes In Negotiations
- No, NFL’s New Gambling Policy Is Not That Much Better
- How Vegas Was Changed By Tiger Attack At Siegfried & Roy 20 Years Ago
- My Mind Is Blown As Fontainebleu Las Vegas Nears Completion